LCK 1.92% 25.5¢ leigh creek energy limited

The time has come the walrus said..

  1. 21 Posts.
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    Happy times sisters and brothers, happy times.  


    I cannot remember how many de-risking events we have gone through to get here.  Its important to list some to give the respect these obstacles deserve.  LCK has secured a core investor with deep pockets and experience to provide the capital required in the past (when local institutions and investors ran for cover) and in the future. I think that was at about 13c share price.  Then, environmental approvals, additional monitoring wells, an attempted Board takeover, disgruntled shareholder relentless selling to dive the share price down and frighten investors and core stakeholders (down to 8c per share at one stage) and off course the most recent Greenie/ATLA court action.  The great news for shareholders is that we have a Board and Management that is now truly 'battle-hardened' and set to take on the next phase.


    Many investors are asking what the stock's value is.  As I have mentioned before, the math is straight forward.  And incidentally, the company has already lab tested the LCK coal to determine its quality and the quality by all accounts exceeded expectations.  These tests were conducted over a year ago.  That means we have no issue with the gas quality and the ability to flare.  What will now be reported is the gas flow rate (which the company can regulate) and the gas quality (which has already been extensively lab tested).  The lab is not a cavity 500m below surface but the LCK engineers have successfully done this before.  


    The valuation.  The company has about 3,000PJ of 2C syngas and I believe that a realistic recovery is about 66% or about 2,000PJ.  That equates to about 2.0 billion GJ (2,000 x 1,000,000).  After a steady flow rate of about 2 months the LCK gas will be reclassified as 2P gas.  The market is valuing 2P gas at an average of $1.20/GJ.  If LCK has 2.0bn GJ that gives a company valuation of $2.4 billion or (assuming 600m shares is issue) $4.00 per share.  


    The market will not attribute the full $1.20 valuation initially so post flaring the price should trend upward to the 40c-50c level (10% of average market value) and with possible index inclusion and gas reclassification by December we could be looking at a share price in the $1.00 range or above.  How good is that!  I'm so pleased that our disgruntled shareholder may have now sold most of his shares at a level below 20c.  Cannot wait to see the updated top 20 shareholder list.  


    I think we can smile a little but we cannot really relax just yet.  I'm a seller above $2.00 in the short term.

 
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